It seems like if I align the top of the rotated monitor (Mon2) to line up with the top of the standard monitor (Mon1) I can achieve this. However the arrangement is very awkward and not a comfortable viewing position for me. I'd prefer the ability to calibrate this based on the monitor heights that are comfortable for me.

And not just for windows, but I'd like my mouse cursor to understand this as well.

I'm not sure I agree with this being a duplicate - while the ANSWER is the same, the PROBLEM is worded differently enough that somebody searching in one manner might not find the other. This is a totally different question ("I can't move my mouse" vs. "My windows don't line up correctly"). Only somebody who already knows the answer would equate these two.
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ShinraiSep 10 '11 at 14:39

4 Answers
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In Display Properties, you can drag the thumbnails of the monitors around (this is how you tell Windows exactly the monitors physical relationship to one another if it doesn't guess them right by dumb luck). The alignment you make with those thumbnails EXACTLY reflects the overlap between the monitors (just like in your ASCII-art, basically), so you just need to play around with it until you get exactly what you want. (It sounds like you probably have the tops aligned currently - it will attempt to snap to common edges.)

Note that unless the pixel pitch is identical on these monitors, you'll probably never get perfect alignment across the entire length of the screen.

Even with perfect pixel pitch and all that, there are a limited number of adjustment options. The screens in the dialog align to a grid that does not allow incredibly fine control. Unless you are very fortunate, it can be impossible to get an EXACT alignment between the screens if they are different sizes or resolutions or orientations.
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music2myearSep 9 '11 at 15:35

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@music2myear, true, but I got it close enough that I could nudge one monitor up or down slightly to get exact alignment.
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Doug T.Sep 9 '11 at 15:36

@music2myear - That's true, actually managing to align them can be difficult. You might have better luck with a third party monitor management app (UltraMon, DisplayFusion, or something like that) if it's really that difficult because they can possibly give you better control. Generally you can get close enough, though.
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ShinraiSep 9 '11 at 15:37

I've used multiple malaligned monitors a few times and I've always been able to align windows perfectly. It's not that hard.
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configuratorSep 9 '11 at 17:46

You didn't say what operating system you were using, unless I missed it.

The answer for Linux is to use the program xrandr, which dynamically changes your video settings. The option for adjusting is --pos.

If you have 2 monitors of 1280x1024 and 600x800, for example, on the second monitor you would use: --pos 1280x0 for the upper left corner of the second monitor to align at the top, or a --pos 1280x100 for the second monitor's top to be 100 pixels down from the top of the first one. Since xrandr does not require you to restart X-windows, you can run the command repeatedly and view the results immediately.

Once satisfied, the command you used can be put into a script and put in wherever you linux distribution wants user scripts to be on startup of X-windows. It varies a little but is easily googled to find out the exact location for your flavor of Linux.

If the reason the second monitor need adjusted is because it is rotated 90 degrees, you use the --rotate option with either left, right or invert on the same command line for the second monitor.